Marks gloom continues but Tesco shines

Marks & Spencer today revealed a further dramatic fall in sales figures and then disappointed shareholders even further with its buyback offer.

Marks & Spencer today revealed a further dramatic fall in sales figures and then disappointed shareholders even further with its buyback offer.

At the same time Tesco posted a 24.4-per-cent hike in profits to £822 million after a half-year of "excellent progress".

M&S said that on a trading week basis comparable with the previous year, its total like-for-like clothing and home sales in the 10 weeks to September 18 were down 7.7 per cent against the same period last year. Food was down 2 per cent, giving an overall fall of 5.2 per cent.

It said shareholders could get 10 per cent more than the retailer's current share price from its £2.3 billion share buyback. The group said it would offer tenders for shares between the range of 332p per share to 380p per share.

That represents a possible 3.9 per cent loss on yesterday's middle market closing price of 345.5p or a potential premium of 10 per cent, M&S said.

New M&S chief executive Stuart Rose promised the buyback to investors in return for support in rejecting retail tycoon Philip Green's takeover offer of up to 400p a share in July.

In contrast, Tesco said today that it had seen strong growth in clothing sales and other non-food activities in its first half, helping it to report a 24.4 per cent rise in pre-tax profits to £822 million.

The profits figure was at the top end of analysts' forecasts and came as like-for-like sales increased by 8.3 per cent.

This included strong growth in clothing and home entertainment, and left the company "well placed" to meet the challenges of tougher comparatives in the second half.

Mr Rose described Tesco's results as "fantastic", adding: "We know they're strong competitors, but we just have to fight back."

The buyback is conditional on shareholder approval from an extraordinary general meeting on October 22 and the closing time and date of the offer is 3pm on that date.

As well as the share buyback, the group's revival drive includes plans to focus on its core business by selling its financial services division and to buy the Per Una fashion brand from fashion designer George Davies.

The review by Mr Rose found the business had become too complicated, with stores cluttered with too many different lines.